The Cost Of Kidding Yourself

Five years ago, every American would have considered a trillion-dollar budget deficit a national tragedy. If you believe the CNBC parrot show, NOT having a trillion-dollar deficit is now a sure sign of the Apocalypse. I speak of course of the cleverly dubbed “Fiscal Cliff,” which panicked CNBC apologists are required to mention no less than 5,000 times a day. We’re told ad nauseam that going over the cliff will drag the US into recession. Here’s what we’re not told: The US has been in recession 9 of the last 10 years. It’s in recession this year, and no matter what CNBC’s financial terrorists say or the idiots on Capital Hill decide, it will most certainly be in recession in 2013.

Creating the illusion of economic growth is easy if you can print money. It’s a prank you can play on an entire country. Cut the value of the currency in half and the economy’s size will appear to double. If it doesn’t, you’re in recession (whether you know it or not). Cavemen probably understood this concept better than America’s best economic minds.

The only way to accurately measure changes in a nation’s economy is to do so relative to the world (see Notes for non-nerds below before protesting). According to the World Bank, the U.S. represented 31.8% of the world’s economic activity in 2001. By the end of 2011, that share had dropped to 21.6%, meaning America’s slice of the world economy is 32% smaller than it was a decade ago, and getting smaller every day. Note that America’s housing bubble did nothing to boost the U.S. on the global stage.

As horrific as these results are, they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.” Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak. But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively. The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010).

The more they “fixed” it, the more it broke. 17 years later, the only thing Japan has proved is that smart Japanese economists are about as real as Godzilla. Time and time again, the country has chosen collapse over admitting failure. On November 19, 2012, Bloomberg reported, “The Japanese government will spend 1 trillion yen ($12.3B) on a second round of fiscal stimulus as it tries to revive an economy at risk of sliding into recession.” It would be funny if it wasn’t so tragic.

The United Kingdom gets third place in the 2001-2011 major economies’ “Race to Oblivion”, although with a less than 3.5% share of world GDP it’s hard to call this a major economy with a straight face anymore. While the U.K. printed its way to 24% loss in world GDP, France and Brazil both passed the nation where an actual troy pound of sterling silver now costs about 235 “pounds sterling”. With government debt expected to reach 88.7% of GDP in 2012, once-Great Britain will soon be seated at the kids’ table at economic summits, if it gets invited at all.

All three of these countries are in death spirals for the same reason: They believe that they have the ability to avoid recession by simply printing their own money. As America’s 100-year numbskull (and current Federal Reserve Chairman) Ben Bernanke once mused:

“…the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Oh wait,there is. So just for fun, let’s project the last ten years growth rates forward another ten years:

And there you have the real New World Order (sorry Freemasons). In ten years China’s economy will be bigger than those of the U.S., Japan, and the U.K. combined. What are the chances they will drink the same kool-aid we are presently guzzling? Will they need, or even tolerate, the opinions spewed by our pundits and politicians? And more importantly, will the U.S. dollar still be the world’s reserve currency?

Being a war-mongering banana republic isn’t all it’s cracked up to be, and despite what CNBC’s fast-money fuckwits may think, the stock market is not America’s report card. Wall Street is the white elephant that America can’t afford to feed anymore and China doesn’t have the slightest interest in buying (just take a look at the Shanghai Composite). Continuing to yield to its tantrums will undoubtedly destroy us.

Fun Facts: Total U.S. GDP growth in the 20th century was $9.93 Trillion, while the government accumulated $5.5 Trillion in debt. In the 21st century, the US has borrowed $10.7T and has a grand total of $5.30T in GDP growth.

***

Notes for nerds: Most of the calculations presented were derived from data compiled by the World Bank which can be viewed or downloaded here. World GDP was set to 100% and each country’s percentage determined simply by dividing by world GDP. Japan’s debt as a percentage of GDP from Fred (225% was used for 2011). Estimate of U.K.’s 2012 Debt/GDP from here. U.S. GDP stats from USgovernmentspending.com (2012 estimate adjusted for 2% growth). US debt from Debt to the Penny.

Notes for non-nerds: How much World GDP changes from one year to the next depends entirely on what is being used to measure it. For example, World GDP expanded by 109% from 2002 to 2011 in USD terms, but contracted (-59%) in terms of gold. Using the Euro would produce different results (+59%), as would using barrels of oil (you figure it out). Looking at countries relative to World GDP is an honest measure of their changes. To say that Japan is still growing (at least in terms of Yen), but everyone else is growing much, much faster in terms of Yen distorts the reality that Japan is undeniably shrinking relative to the world (no matter what currency is used).

Well, I guess this would be a matter of one’s belief in your fellow man/woman, call it, a section of this species. I will use myself as an example, "From what I have seen within many of the people within ZH, there are those that do have levels of sight in which, we all can learn. Hence, which is why, like others, have decided to join."

After all, what is the purpose of "open source"? Namely wikipedia. And source code, along with many others applications of this ideal.

Which leads me to this question.

YES, there many within ZH that do have some genuine applicable insights into the economic/political/social environments within our different shared western societies. Yet, how many of you have, that internal balance between your logical and emotional sides to not just see, but to see through?

Optimist am I? Perhaps. Yet how about this, "WE ARE NOT DONE."

Cheers,

Pens,

Ps. Which also means, I myself will be dropping by more often as well.

Yep. Double the money-supply over 10 years (as they plan to) and you'll get inflation of a minimum 10% per annum. So we repeat the 1970s following the economic policy of Japan. The dollar is going the way of the yen.

For those who did not live as a working adult through the 70's, this concept is a little difficult to appreciate. Not saying "they" will be able to pull it off (again) but it sure looks like they are trying.

<For those with Just-In-Time paychecks.......when facing the choice of half a loaf and none, there really is no choice.>

I remember the stagflation of the 70's very well. For several years we got "cost of living" pay raises every 6 months based on the inflation rate(not sure who calculated it).

The sheeples, especially the younger ones, are going to shit in their britches when they see the "price inflation" of stuff that's coming on top of the "asset deflation" of paper assets like the US$ that will accompany the price inflation of stuff.

There is already a lot of hidden inflation - less product in what is superficially the same sized package, or just less product at the same price point. And sometimes, not so hidden inflation. Almost two years ago, rolls of toilet paper got smaller. They shrunk from 4.5 to 4.1 inches wide, and the length of the roll also shrunk (some brands more than others). One hundred rounds of Winchester FMJ 9mm has gone from $21 to $23.

the 70's in retrospect where a time where our world was dancing on a tightrope. 40 years ago and nobody really recalls it.
All my father remembered was that his paycheck was bigger every month.
why this time is different?
Our governments feel our paychecks should match the chinese paychecks and don't want them to rise.
and yet... we expect companies to grow their revenue a billion a quarter at least to get a normal divident or hope they'll eventually give one.
we invest bigtime in wallmart, Apple and all the low paying employers.
we pick up a smart phone, go to a store and scan the products hopping we'll find it cheaper online.
we all like to pay pennies for a product but want to earn tens of thousands of dollars a month.

and we complain over the debt?

we are consummerists that love crap. feel robbed for paying peanuts. feel like we all deserve a hommer simpson job where we press a button once a day without knowing what it does for top dollars.

yeah.... where will this,recovery come from?

why should we hope for a better future when we are all willing to drown the future in debt?

CNBC is laughable like a 2 clown circus. The station is filled with Obama sack swingers who just want the status quo to continue. Never mention spending as a problem. I saw they had the ancient fraud Buffett on again and Quick was gushing like a school girl. They have some mentally challenged cub reporter named Sorkin on now in the morning in between LIESman and that piece of shit Kernan. I watch the crawl on the screen with the sound off early in the morning. If I listened for any length of time I'd just commit suicide

Dayum, second time in two days I missed the sarcasm. pretty hard to miss, and its usually my stock and trade. shoulda known nobody on fight club would be defending Kramer. Kind of like defending Karl Marx.

The more fiat/credit/debt (all the same thing in a Modern Money Mechanics/full fractional reserve fiat system) that is printed the better the economy fares.

Do not resist the inevitable. 25 trillion of national debt officially (approximately 250 trillion plus using an actually relevant, accurate method of tabulating the debt in line with Kotlikoff's calculus) will soon (probably within 7 years) be the former 1 trillion in national official debt.

You will be assimilated.

Read the following article carefully, and as fellow ZHers have pointed out, see if you can spot the clear message that "it's better than Ghana is the new middle class target."

Angelina Sam couldn’t afford to celebrate Christmas last year, serving peanut butter, soup and rice for the holiday meal. And she didn’t buy gifts for her husband or 2-year-old son.

But last week, Ms. Sam had already done five rounds of holiday shopping by the time she headed out for Black Friday specials in a suburb of St. Paul.

“The money was not there,” Ms. Sam said of last year. “But this year, I’m very, very confident.”

Americans are feeling better about the economy than they have in four and a half years, data released Tuesday shows. Preliminary consumer confidence results for November by the Conference Board showed an uptick in confidence, with the index rising to a preliminary 73.7, the highest level since February 2008, from 73.1 last month.

Retailers say they are hoping to cash in on that confidence, beginning last weekend with a deluge of discounts and specials meant to draw shoppers into their stores and onto their Web sites.

But while shoppers like Ms. Sam raised hopes that growing confidence might mean increased sales, economists and retail analysts have said many Americans — even some upbeat ones — continue to hold back.

Ms. Sam, a Ghanaian immigrant, was ready for the holiday season, having paid off her $1,000 Visa bill earlier in the year. An energetic shopper, she hurried through five stores in five hours on the Friday after Thanksgiving. She grabbed a $49 Nook e-reader at Target for her brother in Ghana; a $24.99 Disney Cars bike for her son at Kmart; a $6.88 Disney Cinderella watch for her niece at Walmart; and a $49.99 luggage set from Kohl’s for her mother.

***Ms. Sam said it was all made possible by a grueling work schedule. A nurse’s aide, she took a second full-time job this year, adding an eight-to-12 hour evening shift to her schedule. She now works as many as 100 hours a week, for $13 to $15 an hour. (She took Thursday night off, so she could find some deals.) Her husband has a full-time engineering job***

“Sometimes I get tired,” Ms. Sam said, “and that is to be expected, but I want the best for my son. So I have to work hard for him, just so he doesn’t have to work a double job in order to survive.”

Ms. Sam seemed almost mystified by the extra income this year. “This year there are leftovers,” she said. “We can save money and put some into our son’s account. We still have extra money to spend.”

It was not enough extra that Ms. Sam could indulge after buying presents for relatives: she bought nothing for herself. “I don’t think about me,” she said. “I think about my family. If they’re happy, I’m happy.” She added, “Maybe when I’m done shopping, I’ll give Santa my list.”

I have a little different take on the article. This approach of sacrificing one generation to leapfrog the children solidly into upper-middle class America, has worked for many immigrants.

Entrenched Americans attempt the same result but spin their wheels by taking on student loans for a degree not worthy of the resulting indebtedness.

What one does not see from the article is the flip side of the child being showered with gifts is the stress and expectation he will feel to excel commensurate to the effort his parents are putting out on his behalf.

Take a lesson, America. Live below your means. Avoid debt except where it is an honest investment for a greater future reward (not a hope or wish), work your butts off, and pour most of your effort into giving your children the same head start successful immigrant families do.

These families routinely drive older cars, live together in good surburban school districts, and disproportionately get their kids into the top 25 colleges - majoring in something with immediate market demand.

The article highlights a woman who works more hours than the average American is willing to do, is thrilled about her good fortune, and even though her spending is the focus of the article, she notes she will have money left over for savings, too.

There is no mention of her taking on debt for her purchases.

Unlike the typical American who will take months to pay off their holiday purchases, Mrs. Sam will be saving and investing in her family as of Jan 1st, 2013. That's how it's done.

We also have to take into account the internal wiring of various peoples throughout the world. While having a meager starting point and forced labor are often a steadfast governor for consumption and perspective of wealth, they're not the only considerations. I think there is a much broader conflict... The issue is that wage arbitrage is not a virtuous endeavor. In fact, it can be implemented in such a manner (inevitably I think), that ensures basic human rights/natural rights are violated (i.e. the supposed pillar of objectivism), through among other things a tragedy of the commons. Some people are inherently more tolerant of abusive behavior... of obscenely disproportionate spoils from similar work. But it chips away at everyone none the less.

The bigger issue is that in order for society to continue down its path, the populace must buy in to its direction. At this juncture, there is not only a vote of no confidence booming, but a complete rejection of many commonly held beliefs. You can complain about american donkeys lying down in the dirt and refusing to budge, but the carrot is no longer the same motivator it used to be. While not as luxurious or nice, subsistence living is vastly less complicated. There is presently a change going on whereby people are no longer capable of keeping up with all the complexities and intricacies of modern living and are choosing not to participate. In short, the juice is not worth the squeeze... the shiny and sparkly things not worth the headaches to achieve them... the winners and losers not meritoriously chosen.

I concede that many americans are lazy... but it's academically lazy to leave it with a blanket characterization and not conduct further analysis. There are much bigger issues at play.

Sacrificing herself to leapfrog the children is a noble deed, and I commend her. However, her children will grow up in public schools and will assimilate with the native black kids. By the time they grow up they'll be more like inner city gangsters than their thrifty, hard-working parents. Shame, really.

grid-b, I can respect your respect for Ms. Sam's sacrifices. I think she's a stand up person if she's really the person portrayed. If there were more Ms. Sams, we'd be better off.

But I think your judging the article out of context. If you subscribe to the notion that American does (or did) stand for consistency in leaving future generations off better than those that preceded, then Ms. Sam's transplanted experience throws the context of that notion out the window.

Immigrants moving from third world, corrupt nation-states, and finding life better on a relative scale, isn't exactly inspiring.

p.s. - An aside; why mention that her "husband" is a full time engineer, which presumably means he is employed full time, yet make no mention of his income as it relates to Ms. Sam's household budget nor dismissal of her own material wants?

Ah the illusion of Amerikan Women and their desire to be a slave to anyone who would pay them to be regardless of education. Now nothing much to show for other than thant fancy BMW and lots of clothes which is worthless.

Departure Memo of the Day: Parenting Gets The Best Of One Biglaw Associate

This is really common. The majority employers' paradigm is still to view employees as something far less than peers... merely people to be exploited, the result being wage arbitrage. However, successful businesses of the future will cater to talent, however situated, and make good faith attempts to limit turnover. Burst production will be less, but overall production will probably be unaffected and, moreover, the pitchforks will be kept at bay. Welcome to a new era... someone joins the ranks every day like this law associate.

There is no New World Order. The Bilderbergs are just a bunch of self-important clowns who are arrogant enough to think they even understand all the variables, much less control them. Ditto Davos. Ditto the G7/8/20. Add the Trilateral Commission, the Masons and Opus Dei. Skull and Bones? Just a bunch of drunk frat-boy types who never quite grow up.

People who attribute great power and control to the elite are merely compensating for their own lack of resolve or courage or success. It is an excuse for failure, nothing more. It is an admission of defeat before the battle even starts. All of the conspiracies attributed to the great unseen forces get more bizarre and less rational with time. Eventually the conspiracies don't even have to make sense; they just have to be stated repeatedly, quoted in articles, linked in comments etc., until they become a kind of tautology. Everybody feels better about themselves because they have an excuse not to attack the gods.

The one mistake I see many writers make on this blog is to over estimate the power of those who are raping the US and oppressing its citizens. Some people seem to believe the elite are surrounded by a massive force, like the ones protecting the arch villains in James Bond movies, and who get ceremoniously slaughtered in the climactic scene.

In point of fact the elite is quite small, poorly protected, and able to do what they do simply because the general population allows it to happen.

The source of their power is actually quite simple. Money. That’s it. They have gamed the system so that the monied interests scratch the backs of the legal holders of power (who are different from the holders of physical power), then the leaders do a reach-around and take care of the desires of the monied elite.

(Chindit had 3 more pages in this comment, all of it good, I will refrain from posting it)

While we claim that our GDP is about $15.6 trillion, Dagong, the Chinese rating agency claims that US GDP is only about $6 trillion once you take out the fake financial padding:

“In the components of the U.S. GDP in 2009, the financial services sector accounted for 21.4% while the real economy sector accounted for 65%.The total output value of the U.S. financial services industry is composed of two major parts: one is the transferred production value, most of which comes from value distribution of participating in international production. Another part is the inflated value originated from credit innovation, which belongs to bubble value. In addition, due to the high economic financialization, more than half of the profits in the real economy come from the returns of financial activities. If we exclude the factor of virtual economy, the U.S. actual GDP is about 5 trillion U.S. dollars in 2009, per capita GDP about $ 15,000. Meanwhile, the total domestic consumption was 10.0 trillion U.S. dollars and government expenditure was 4.5 trillion U.S. dollars. The production capacity of real value in the national economy is the material base to arrange social distribution and consumption. As the U.S. government arranges its budget according to the GDP including the virtual value, its revenue must fall short of its expenditure, so the socialization and normalization of debts will exacerbate the environment of economic development. It is predicted that the average real GDP per year of the United States will not reach 6 trillion U.S. dollar and per capita GDP will be less than 20,000 in the coming 3-5 years.”

That dollar menu may be having some pricing issues soon enough if rail becomes the only option for commodities transport in the Midwest. I deal in bulk tonnage for urea et al.(that is currently sitting sold AND unsold offshore in the Gulf of Mexico) These deals are cash contracts folks and the seller can declare force majeure if they cannot deliver due to acts of some god or another. This problem is just beginning and will depend on snowfall.(none so far really in MN)

In a few more years, when the rest of the highly-geared "civilized" world has reached a sufficiently painful steady-state of civil unrest, the Fed offers to buy out all the existing debt with newly printed US Thalers, or whatever they decide to call them.

Ameros? Credits? Benibux?

We've always known we're going to have float a new currency at SOME point. It's just a question of how long it takes the rest of world to knuckle under and accept that reality. If some furriner has a problem with the idea, his head will look just dandy on a spike next to Saddam, Muhamar, Milosevic, or whoever the hell we want to make the next bogeyman.

If the credit card isn't maxed out then we're obviously doing something wrong. There's a whole lot more money to be printed and a whole lot more spending to do, so get on it America! But seriously, its every man for himself at this point. We hit a point of no return with the last debt ceiling raise. There is no possible way to pay any of this debt down, especially when the our leader is bashing the producers every step of the way. Have you ever seen poor people create a job? 8.5% unemployment is the norm here now. The masses have been duped into accepting whatever the govt. gives them as the growth projection of the day. Only when people stop getting their ebt cards, welfare payments and govt assistance and when bread is $5/loaf, gas is $10/gallon will they start to get pissed. By that time, those in congress now will be sitting on their islands sipping their pina coladas and scoffing at those of us who still believe in the dream.

CNBC is an extremely low-ratings, joke of a network you say, that pretends to communicate objective news on all matters financial you say, but is a clown parade for sell-side snake oil salesmen & carnival barkers you say?

"money" , in our system, is a debt that keeps
on begging for more debt from other central banks
required to create more debt to buy the existing
debts that will be bought with future debts.
someone said "underwriting". that is funny in
the current money system at this point in it's
devolution, but the joke does not end well i
suspect.
.
in fact it is a cold and criminal case resulting
in death and suffering for the many to the
"satisfaction" of the few imbeciles in positions of
influence.
.
i know , the solution must be to bail out the fraudulent
banks and loan originators .... again , maybe many
more times, or at least untill the "money" itself
is worthless, when the centrally connected have
bought the real assets at the lows and sold the
bonds to the fools. when the yields go up they will
close the banks, holiday ! (cheers), and then
recalibrate. no?

Twelve years ago or so, when the US market was defying gravity and logic, I was pummeled by my friends who, unlike me, were long and couldn't understand why I was missing the party.

My neighbor who ran a successful lawn and garden business would brag about all of the money that he was making in the market. He loved to buy stocks that were rumored to be about to split. When the party finally ended, he lost his business and most everything that he owned.

Today's investors are like my neighbor. They don't realize that there is no difference between one share of IBM at 100 and two shares at 50. Or, DOW 8000 with gold at 800 or DOW 16000 with gold at 1600, there is no difference.

One thing is for sure, gold will outpace the DOW in real return over the next several years.

I blame Google for raising the bar on ridiculously large numbers that are now the new normal uttered by idiots in the media. I'm waiting for the day not far off in the future when inflation will be measured in 'Google's'.

The bigger scam is deliberately understating both unemployment and inflation. Real inflation is about 10% according to shadowstats.com. Therefore, if the gross offical growth rate is 4% minus the offical rate of inflation of 2% that leads to the net growth rate of 2%. But if real inflation is 10% that means the economy is shrinking by 6%.

Btw John Boehner needs to be removed as the republican leader of the House. He needs to move on. I can't stand failed leadership continuing on in their same role. Same for Mitch McConnell in the Senate. Lets get some new republican leaders to negotiate properly with the president. They are an embarrassment and are constantly getting rolled by Obama, Reid, and Pelosi.

Neither impress me on having any original thoughts on policy and they are getting their ass handed to them politically.

The problem is that with the $US halving, the personal economies of the decision-makers HAVE actually doubled (conservatively). Until real pain is felt by the people with the pitchforks, there will be absolutely no change in course. I just hope it happens before the FEMA camp planning and weapon confiscation campaign have matured.

Obama is calling for supporters to make youtube videos to promote his plan to bilk the rich.

Already, supporters are being asked to record YouTube videos of themselves talking about the importance of raising taxes on the rich. Aides said those videos would be shared on Facebook and Twitter and would be forwarded to centrist Democrats, as well as to mainstream Republicans, who they hope will break with their Tea Party colleagues.

Obama Obama Obama Obama Obama Obama...Dear leader asks and I will doooooooooooo, I shall go to walmart and purchase a new webcam when my welfare check rolls in and make a video for dear leader bhaaaaaaaaaabama bhaaaaaaaabama!

at risk of having my account at ZH hacked the parade of the IQless continues across the time zones.

when the Big O was first announcing the twitter hashtag confused between #my2k and #y2k the results were more than predictable

It is now 9 hours later and in Asia it is a warm cloudy morning, scroll down a foot or two and a few stragglling tweeters from bumfuck Ioway are tweeting away bout them rich SOBs wanting to take away their snap cards

Of course, the projections presume NOTHING goes wrong between now and 2021.

The BRICs are doing well enough, but are still dependent on the Western ecnomies to consume whatever it is they produce. Can they collectively consume everything they produce, and so prevail without western economies? Not a chance.

Even if China has the same GDP as the US, its per capita GDP (lifestyle) is still 1/4 ours.

Having multiple life expectancies, albeit short in duration I have a few concerns about 2031 and beyond. Short of the Eugenics party coming to power in the year 2019, or an asteroid in 2018, the roaring twenties of the 21st century are likely to be as close to hell on earth as anything the twentieth century was able to serve up

This one is another self-hating Jew - he suggests that a deal was done by Zionists that guaranteed a homeland in Palestine if the German Jews sold out Germany in the war... and that was the reason why Hitler turned on Jews.... of course if you are a Zionist banker you wouldn't want that bit of info getting out would you - it doesn't absolve Hitler (what he should have done is hung the Zionist bankers not killed millions) but it sure does spread the blame around http://www.scribd.com/doc/8634450/Germany-and-the-Jews-by-Benjamin-H-Freedman-1961

I disagree with the concept ' The only real way to measure economies is by relative share of world GDP'. That seems too much a military way of looking at the world and ignores the prosperity of places like Switzerland.

Relativity using currency has some value...but this was not the real focus of the article.

I did like the first 2 sentences about strange shift of public feelings of bad and good regarding trillion $ deficit, 5 yrs ago vs now.

Also any projections of the future of developing nations like China, should consider the poor services presently provided my govt in infrastructure,health, education ,welfare etc;....their debt to GDP looks strong now..but with more int'l standards...their debt to GDP is not so good...or .... terrible...China might be one of the better countries..but even there things are worse in the West and with still plenty of deprived people in the East.

Over the next 10 years it is likely that developing nations populations will demand more humane treatment , putting great strains on govt spending and management or the economies will incur extreme costs of political turmoil and revolution as we are now seeing in the Arab world etc....along with bottleneck slowdowns caused by poor roads, power etc

1.1 trillion USD budget deficit for 315 million Americans amounts to circa $3,500 USD per US Citizen per year -

or ca 7.00% of 15.5 trillion US National GDP - and that is a high budget deficit even for the USA.

(correction from previous; It is actually a very high deficit, with that US defence/war budget alone at 657 billion per year)

National Debt of 16.3 trillion and all those other unfunded future obligations is where the real problem lurks.

If you owe more than you make on GDP, pretty soon that starts to make an impact via higher Interest-Rate Loan re-payments and also increases in cost of those Items excluded from CPI like : Oil, Food, Energy and other Commodities.

That's when the whole picture starts looking more and more like Greece.

Global Central Banks and the global Shadow Banking sector are trying to solve their Debt problems exactly the same way - by devaluing their currency and increasing their spending by taking on ever more and more Debt - taking on ever bigger risks of holding fast depreciating assets on their books, or hiding it via derivatives in the speculative shadow-banking and hedgefund sector. Private Equity and Hedgefunds are now on a roller-coaster, they can't get off anymore.

They take enormous risk, investing in worthless Junk-bonds of failed sovereigns like Greece or vastly overpriced Junk-bond Bank holdings of anything risky or willing to take on more debt, hoping that Central Banks will come always to the rescue.

This has become a game of russian roulette the world over, and Central banks the world over are expected to pay for it.

Wait...if you could print your own money, would you be in debt? I wouldn't be...Congress can print its own money but...the country is in horrible debt...so who's printing the money? How to take over a country without firing a shot...well, except a couple in November of 1963...minor detail.

in the long run people can consume only as much as they earn. If companies underpay their workforce then the workforce will not be able to buy all the goods produced.

So either companies consume more themselves (probably involving alot of malinvestments) or somebody (central banks) has to lend new money to the consumers to artificially prop-up the demand. This is what was going on since Reagan invented this new demand vehicle. Now it is exausted (interest rates at zero and noone borrowing)

What next ? Obama has started giving money away for free through welfare. It could help if recipients were spending the money to buy locally produced goods but unfortunatelly for Obama most of it outflows to China

The japanese have turned Keynesian theory into a form of national economic hari kari. Most free world goverments seem to be pursuing the same death wish. There are no 72 virgins waiting on the othwer side of the abyss.

Countries around the world are taking on more debt without any fruitful attempts to curb their expenditures. This has resulted in a much more fragile and artificially held up financial system which is on a much shaky ground than it was in 2008. In 2008 companies failed due to excessive leverage and debt and now countries are likely to default because they took on the same bad debt on themselves.

There is no economic recovery because all the efforts of politicians, government, central banks etc are focused on saving banks instead of targeting job creation which is the only way economy can recover.